7 Money Moves to Make as Soon as the Kids Move Out


Have your kids recently flown the coop? Huzzah — it's time to celebrate, empty nester! Shed a few tears so you don't look completely insensitive, but then get down to business. You've put in 18 years (or, God help you, even more), and now it's time to concentrate on you and your future. Thus, here are six money moves you should make as soon as your little kids strike out on their own.

1. Cut Your Children Off as Financial Dependents

Cutting your kids off the financial gravy train doesn't mean you can't help them out when they're in a tight spot, but they're adults now and they need to start acting like it. Start handing over the bills to their cellphones, car insurance, and whatever other payments you're taking care of on their behalf.

Similarly, this also is the time to start reversing the mindset that they can call Mom and Dad whenever they need money. If you've facilitated this kind of reliance in your children, it's time to help them learn to stand on their own.

2. Increase Contributions to Your Retirement Fund

Now that you've freed up a good chunk of your disposable income, you can start concentrating on yourself again — and right now that means retirement.

"Once you have an empty nest, it's time to make sure you're on track for your retirement," says retirement-savings expert Patty Cathey. "I recommend putting away 15% of your salary into a 401K or IRA. If you can put more away — do it. You may have some ground to make up if you've been prioritizing you kids over retirement."

CFP Scott Hanson, who owns a financial advising firm in California, offers an additional tip on how to play catch-up on your retirement savings.

"You can contribute as much as $24,000 into a 401K plan if you are age 50 or older. Too few of us ever reach that milestone, but from my experience, those that have contributed the most to their employer's 401K or 403B are in the best financial position at retirement time."

3. Make Improvements to Increase the Value of Your Home

If your home has been neglected for a few years (or more) because you've been paying for your high schooler's academic, athletic, and artistic needs (and then exponentially more during college), now's the time to start directing some of that money back into your tangible investments. Fix what needs fixing and give the joint a cosmetic face-lift where necessary to increase its value. Just be careful that you're not making expensive improvements that won't pay off in the long run. Concentrate on what's key to buyers and leave the rest for them.

4. Develop a Strategy to Pay Off Your Home

If you're nearing retirement age, chances are you're well into paying off your mortgage, if not approaching total payoff. You'll put yourself in the best financial position if you can develop a strategy to eliminate that mortgage debt altogether.

"Calculate how much you should pay each month so that your home is paid off by the time you reach retirement age," Hanson advises. "For example, if you are age 52 and want to retire at age 65, you'll want to adjust your payments so that your home is paid off in 13 years. There are many online calculators that can help you figure this out."

5. Offer Your Kid's Room to a Rent-Paying Boarder

You'll find help in paying off your mortgage faster or putting more money toward your retirement plan if you can monetize the extra space in your house. If your kid doesn't have any plans to return (or you've changed the locks so they can't — and high-five for that!), consider turning their bedroom into a short or long-term rental.

There are pros and cons to both situations.

On the short-term side, there's potential to make much more money per month if you live in a well-traveled area, and you have the pleasure of welcoming new guests on a regular basis (if you like that sort of thing), while avoiding the annoyance of a full-time tenant. If you prefer a more long-term situation, you can count on steady income, though it may net less than a short-term setup, and you won't have to continually greet new guests and clean up after them.

Either way, my philosophy is that if your empty room isn't making you money, it's costing you money — and when you look at it that way, it's easy to discern which is the better solution for your savings goals.

6. Consider Downsizing to a Smaller Home

If you're not keen on renting your extra room(s) to short-term vacationers or a long-term tenant, consider downsizing altogether if you have more space than you really need. At this stage, there's no point in paying for a three or four-bedroom mortgage when you may be able to buy a new one-bedroom condo outright with the money you make from the sale of your existing home. Cutting your mortgage way down will help also you put the excess savings toward retirement.

"You'll not only save money on the mortgage, but you can save on utility bills, maintenance costs, and taxes," Cathey adds. "Not to mention, you may be able to ease some of the home maintenance burdens, freeing up time spent on cleaning, lawn care, and shoveling."

7. Look at Other Areas in Your Life That You Can Downsize

Driving a gas guzzler? Look into an inexpensive, more fuel-efficient vehicle. Keeping services, memberships, and subscriptions that you don't really use? Cancel them. Energy costs eating up a good portion of your budget? Research ways to cut back and go a little greener. There are likely plenty of areas you can shave money off your bills here and there by reducing what you're using. The amount may seem insignificant singularly, but combined they'll add up fast.

Did you kids recently move out? What have you done to put more money back in your pocket instead of theirs? Let's discuss in the comments below.

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